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Mexico Industry News

Growth in the Mexican automotive industry spurs investment throughout the supply chain

The steady and significant growth in the Mexico automotive industry is provoking suppliers to ramp up capacity and capability.

A Major Global Player

Anyone that is monitoring Mexico’s automotive sector has noted that, over the last several years, the nation’s industry is increasingly becoming a major global player.

As early as 2009, Mexico broke into the ranks of into the world’s ten leading automotive manufacturing countries. In ensuing years, growth in the Mexican automotive industry made the nation seventh worldwide in terms of overall unit production, and has made it the fourth largest exporter of autos on the planet. Mexico is only surpassed by Germany, the United States and Japan in foreign passenger vehicle sales.

In 2014, Mexico registered a personal best in terms of its impressive output. During the last year, Mexican based OEMs churned out 3.2 million vehicles, which represented an increase in production of approximately ten percent over 2013 numbers. Experts estimate that, by the end of the present decade, capacity will exceed five million vehicles annually.

Suppliers of goods and services expand capacity

As a result of exponential growth in the Mexican automotive industry, suppliers of goods and services are making sizable investment in anticipation of the need for greater capacity. One such example of this circumstance is recent purchase of eight hundred and seventy-five bi and tri-level box cars by Ferromex. Ferromex is the private rail consortium that operates the largest railway, by mileage, in Mexico. The box cars have been purchased specifically for the transport to market of the increased number of passenger vehicles that growth in the Mexican automotive industry will undoubtedly demand. This year, for instance, Ferromex officials anticipate that the railroad’s equipment will move 1.9 million units to market from twelve production plants located throughout the country. Ferromex is one of two rail lines that moves seventy percent of Mexican automotive output.

According to a ranking company official, “The acquisition of additional 875 bi and tri-level box cars will give Ferromex the capability to move compact, medium-sized and large vehicles to the North American and world markets, by enabling us to transport more units to Mexico’s northern border and to its port network.”

Economic Multipliers

To a great extent, because of the growth in the Mexican automotive industry in recent years, Ferromex and Ferrosur, the segment of Ferromex that serves the south-eastern regions of Mexico that includes the important Port of Veracruz, anticipate their total investment in infrastructure and other upgrades to its Mexican transportation and logistics capabilities to total approximately US $411 billion. Currently the automotive industry in Mexico accounts for six percent of the nation’s GDP and eighteen percent of the nation’s industrial output. Growth in the Mexican automotive industry will produce a multiplier effect that will spur investment throughout the supply chain, as well a general economic growth, for the foreseeable future.

Remember, interested parties can receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

“The Tecma Group of Companies' services allow me to concentrate on making and selling wood pallets. I have Tecma handle all administrative functions, Mexican Customs, human resources, all permitting, as well as the legal aspects of manufacturing in Mexico. It’s a very good, complementary relationship. They provide me with a project manager, which means I don’t have to deal with a lot of individuals. I deal with one individual, who then deals with experts in all relevant disciplines on my behalf.”

“When we purchased the Dashmat product line, which is the product that we are manufacturing in Ciudad Juarez, we were able to establish a Mexico manufacturing plant with Tecma very quickly. They got us up and running very smoothly under their Mexico Shelter Manufacturing Partnership (MSMP). We like Tecma because it is a stable company that has been around for many years, and looks to be around for many more. Tecma appears to care about our Mexico business' success is very responsive to our needs.”

“Since we started, we have been able to maintain a competitive advantage over many of our competitors that have moved their manufacturing to China by reducing lead times to 4 weeks less than most of our competitors. This has given us the ability to compete on pricing against many of our competitors that have gone to China. We found that in our Juarez staff in Mexico we found a highly-trained workforce with strong background, and the capability to do mannequin manufacturing in Mexico.”

“More than a decade ago, Portage Electric Products Incorporated was faced with the reality that we were going to have to consider manufacturing in another country in order to maintain our competitiveness in the global marketplace. We chose Mexico, as we could be here literally within hours, should the need arise. We chose the Tecma Mexico Shelter Manufacturing Partnership (MSMP) because it provided virtually everything we needed to begin with and support an ongoing Mexico manufacturing operation.”

This quarterly publication will be populated with content that is useful and relevant to readers that are contemplating Mexico investments, have operations already within the Republic, as well as to other individuals that have an interest in Mexico and its manufacturing sector.